Long-Term Effects of Hiring Subsidies for Low-Educated Unemployed Youths

Andrea Albanese; B. Cockx; Muriel Dejemeppe

doi:10.26481/umagsb.2023008

Long-Term Effects of Hiring Subsidies for Low-Educated Unemployed Youths

Andrea Albanese, B. Cockx, Muriel Dejemeppe

Research output: Working paper / Preprint › Working paper

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Abstract

We use a regression discontinuity design and difference-in-differences estimators to estimate
the impact of a one-shot hiring subsidy for low-educated unemployed youths during
the Great Recession recovery in Belgium. The subsidy increases job-finding in the private
sector by 10 percentage points within one year of unemployment. Six years later, high
school graduates accumulated 2.8 quarters more private employment. However, they substitute
private for public and self-employment; thus, overall employment does not increase
but is still better paid. For high school dropouts, no persistent gains emerge. Moreover, the
neighboring employment hub of Luxembourg induces a complete deadweight loss near the
border.

Original language	English
Place of Publication	Maastricht
Publisher	Maastricht University, Graduate School of Business and Economics
Number of pages	113
DOIs	https://doi.org/10.26481/umagsb.2023008
Publication status	Published - 8 Jun 2023

Publication series

Series	GSBE Research Memoranda
Number	008
ISSN	2666-8807

JEL classifications

c21 - "Single Equation Models; Single Variables: Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions"
j08 - Labor Economics Policies
j23 - Labor Demand
j24 - "Human Capital; Skills; Occupational Choice; Labor Productivity"
j64 - Unemployment: Models, Duration, Incidence, and Job Search
j68 - Mobility, Unemployment, and Vacancies: Public Policy
j61 - "Geographic Labor Mobility; Immigrant Workers"

Keywords

hiring subsidies
youth unemployment
low-educated
REGRESSION DISCONTINUITY DESIGN
difference-in differences
spillover effects

Access to Document

10.26481/umagsb.2023008

RM23008Final published version, 9.18 MB

Cite this

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abstract = "We use a regression discontinuity design and difference-in-differences estimators to estimatethe impact of a one-shot hiring subsidy for low-educated unemployed youths duringthe Great Recession recovery in Belgium. The subsidy increases job-finding in the privatesector by 10 percentage points within one year of unemployment. Six years later, highschool graduates accumulated 2.8 quarters more private employment. However, they substituteprivate for public and self-employment; thus, overall employment does not increasebut is still better paid. For high school dropouts, no persistent gains emerge. Moreover, theneighboring employment hub of Luxembourg induces a complete deadweight loss near theborder.",

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N2 - We use a regression discontinuity design and difference-in-differences estimators to estimatethe impact of a one-shot hiring subsidy for low-educated unemployed youths duringthe Great Recession recovery in Belgium. The subsidy increases job-finding in the privatesector by 10 percentage points within one year of unemployment. Six years later, highschool graduates accumulated 2.8 quarters more private employment. However, they substituteprivate for public and self-employment; thus, overall employment does not increasebut is still better paid. For high school dropouts, no persistent gains emerge. Moreover, theneighboring employment hub of Luxembourg induces a complete deadweight loss near theborder.

AB - We use a regression discontinuity design and difference-in-differences estimators to estimatethe impact of a one-shot hiring subsidy for low-educated unemployed youths duringthe Great Recession recovery in Belgium. The subsidy increases job-finding in the privatesector by 10 percentage points within one year of unemployment. Six years later, highschool graduates accumulated 2.8 quarters more private employment. However, they substituteprivate for public and self-employment; thus, overall employment does not increasebut is still better paid. For high school dropouts, no persistent gains emerge. Moreover, theneighboring employment hub of Luxembourg induces a complete deadweight loss near theborder.

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KW - low-educated

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